DBT Bureau
Bengaluru, 2 July 2024
US-based short-seller Hindenburg Research has received a show cause notice from Indian market regulator Sebi on its last year’s Adani Report, which led to a rout in the group’s stocks.
The US-based investment firm in blogpost said that Sebi had outlined suspected violations over its short bet against Adani Group last year. It also said that the research firm was short on Adani shares ‘through a deal with an investor partner who was indirectly short Adani derivatives through a non-Indian, offshore fund structure’.
The short seller also dragged Kotak Mahindra Bank into this episode as it claimed that Kotak Mahindra Bank created and oversaw an offshore fund structure that was used by its “investor partner” to bet against the conglomerate. It, however, didn’t mention the investor’s name on whose behalf these trades were executed.
In its response, Hindenburg refuted all allegations made by the market regulator.
“One might think that a securities regulator would be interested in meaningfully pursuing the parties that ran a secret offshore shell empire engaging in billions of dollars of undisclosed related party transactions through public companies while propping up its stocks through undisclosed share ownership via a network of sham investment entities. Instead, SEBI seems more interested in pursuing those who expose such practices,” the company wrote in that blogpost, which was also uploaded in its social media handle ‘X’.
It, further, claimed that the market regulator didn’t find any factual inaccuracies in its findings against Adani Group.
“After 1.5 years of investigation, SEBI identified zero factual inaccuracies with our Adani Research. Instead, the regulator took issue with things like- our use of the word ‘Scandal’ when describing multiple prior instances of Adani promoters being charged with fraud by Indian regulators; and our quoting of an individual that alleged SEBI is corrupt and works “hand in glove” with conglomerates like Adani to help it skirt regulations,” the blogpost mentioned.
Last year, Adani Group lost a market cap worth around $150 billion after the report. The company has regained most of its market cap since.
